nuclear funding

On December 12, 2013, the US Department of Energy (DOE) announced the selection of NuScale as the winner of the second round of funding under the Department of Energy Funding Opportunity Announcement (FOA). That announcement, which had been due since sometime in September, must have been quite welcome to a lot of really talented and dedicated people in Portland and Corvallis, Oregon.

They are a good group of people that have been through some difficult challenges, including a financially stressful period in 2011 when the majority of the team had to be laid off and key designers were working for virtually minimum wage. Despite their detractors and unfortunate financial obstacles, they kept pursing their dream of designing simpler, safer, more economical nuclear power systems. They have received a well-deserved Christmas present.

I’ve been following NuScale since at least 2008 when I interviewed two of the company’s founders, Paul Lorenzini and Jose Reyes, for Atomic Show #100.

I’ve always been impressed by their focus, dedication and creative approach to designing a truly safe and simple light water reactor. For reasons that some of my readers will understand, I’ve always liked water reactors that use natural circulation to move the primary coolant into the steam generator. That design choice makes a “loss of all A/C” almost a non-event since the natural circulation flow simply continues to remove decay heat as long as necessary.

Of course, reactors that use natural circulation in all phases of operation have a lower limit on power density than reactors that use forced convection cooling using electrically powered pumps. That means that there is a lower power capability per reactor unit in reactors that are purposely sized to fit within the constraints of rail transportation systems. One can get a pretty good feel for the magnitude of the difference by comparing NuScale’s 45 MWe modules to the B&W mPowerTM reactor’s 180 MWe modules.

The economic comparison between the two is not simple; there are a number of variables and reliability assumptions that need to be included. There is a substantial cost associated with the decision to include eight electrically driven pumps using in the mPower design. Adding them to the system involves far more than just buying pumps and motors. Of course, the factor of 4 difference in unit output is quite seductive; there are some very smart people who have determined that it is worth the extra cost to achieve the additional revenue that can be generated by selling four times as much power from a similar sized pressure vessel.

The safety case difference between the two is also more complicated than is apparent from a cursory look. Though NuScale uses natural circulation for the primary coolant under all phases of operation, the mPower reactor is designed to allow natural circulation of the primary coolant under a long term loss of electrical power. The pumps can no longer be run, but the coolant flow required to remove decay heat is a lot lower than the flow required to produce power from steam generation. Of course, the mPower system has to prove that it can handle the transition from forced to natural circulation in a timely fashion; the NuScale case is a little less complicated.

In fact, in April of 2013, NuScale was able to make a dramatic announcement about the modeled safety of their complete system.

…the company has reached a major technological breakthrough whereby the NuScale Module does not require any electrical power—alternate current (AC) or direct current (DC)—to be able to achieve safe cooldown should the need arise. Additionally, NuScale’s technology does not require any on-going operator action nor additional water to achieve safe cooldown.

It looks like the DOE’s evaluators are not certain which group of smart people has made the right call, so they are providing some support to both concepts to allow them to conduct more detailed engineering and licensing work. Perhaps the modest investment by the government will also enable both NuScale and mPower to attract sufficient funding to build demonstration systems sooner rather than later.

Under the DOE’s FOA program, NuScale will get a portion of the $452 million that Congress has authorized the DOE to invest in supporting Small Modular Reactor engineering and licensing. Congress plans to spend money during a five or six year period that started in FY2013 in up to two cost-share programs where the recipient must invest at least half of the cost. The DOE announcement avoided mentioning a specific dollar amount, indicating that negotiations are still in progress. The NuScale press release indicates that the company will receive up to $226 million.

Though the DOE award was good news for NuScale, I am skeptical about the DOE’s SMR program for a couple of reasons. 1) The amount of money involved is minuscule in the context of the energy industry. 2) The funding has been authorized, not appropriated. It must still be included in each of five budgets and is always under threat of being sliced by the appropriations committee. It is also at risk of being delayed, reduced, or eliminated by the DOE or by the Office of Management and Budget.

Here is how Secretary Moniz described the program in the DOE’s announcement.

Small modular reactors represent a new generation of safe, reliable, low-carbon nuclear energy technology and provide a strong opportunity for America to lead this emerging global industry. The Energy Department is committed to strengthening nuclear energy’s continuing important role in America’s low carbon future, and new technologies like small modular reactors will help ensure our continued leadership in the safe, secure and efficient use of nuclear power worldwide.

In mid November, I attended a conference that included a talk by Secretary Moniz via live video feed. (The conference was in California, the Secretary had work to do in Washington.) Here is what he said then about the DOE’s SMR program in the context of describing the administration’s efforts to support nuclear energy.

Our second major commitment is the advanced technology regime and here, probably the centerpiece is the small modular reactor technical licensing program. We have $452 million available over six years to advance small modular reactors to design/design certification stage.

We think these technologies, and there are a multiplicity of them, as you know, are very, very, very promising. Very interesting features, passive safety features, nice security features, underground siting, factory production, hopefully driving down costs, more flexibility, including flexibility in financing inherent to the scale, but of course we won’t really know about the cost performance until we get small modular reactors out there.

We’ve given out one award so far, that’s to mPower, with the idea that there could be a reactor operating early in the next decade. We have a second procurement outstanding which we are working to finalize.
(Emphasis added.)
(Note: The above is a direct transcription of an audio file recorded during the talk.)

After Secretary Moniz had finished his talk, he allowed time for a short question and answer period before getting back to more pressing business. Here is the question I asked with his response.

Adams: Good morning Dr. Moniz. This is Rod Adams and I am the owner and publisher of Atomic Insights. I’m interested to pursue a little bit your description of the small modular reactor program as a flagship program funded at $452 million six years. That’s roughly one percent of the amount of money that we are spending on the production tax credit for wind in 2013. Will you comment on that, please sir?

Moniz: (Dismissively) Yes. We’re spending 450 million dollars (laughter) to assist two designs, at least two designs to move forward to design certification. I don’t believe these kinds of comparisons are particularly helpful.

(Note: The above is a direct transcript from an audio file recorded during the event.)

That Q&A session was one of the first events of the three day conference. People were still talking about it with me on the last day; they thought it was a good question with a rather revealing response that says something about the difference between announcements and actions and about the way that resource allocation reveals true priorities.

It is important for nuclear advocates to put pressure on the government to not only follow through on its stated commitments to support nuclear energy, but to also recognize that the resources do not come close to matching the scale of the problem. As Moniz pointed out, completing engineering and licensing work does nothing to demonstrate the economics of the small modular reactor. The assumption that manufacturing nuclear plants will reduce cost only works if there is a sufficient order book to support the investments in production equipment required. If SMRs are built at a low rate, there is no way they will be able to compete with larger plants or with fossil fuel plants that are built at a much higher rate.

Nuclear advocates need to understand that the forces that have opposed nuclear energy development successfully for many decades are gunning for the SMR program and working hard to keep it small and focused far into the future.

PS: After asking Secretary Moniz my question, I did some additional searching to find out that, in my effort to be concise and provocative in my question, I had made some errors. My statement that 452 million over a six year period is about 1 percent of the amount of money spent on the Production Tax Credit in 2013 was not correct. The truth is that the annual SMR expenditure of roughly $75 million is about 1% of the estimated $6.1 billion that the Joint Committee on Taxation has estimated that the one-year 2013 extension of the PTC will cost over the ten years that the facilities receive the PTC.

There are several features of the extension legislation and the tax rules that have been drafted to implement that legislation lead me to believe that the $6.1 billion is an underestimate that will be paid out more quickly than over the scheduled ten years. First of all, unlike previous PTC extensions, the 2013 version applies to any project that starts construction, which the IRS has defined as at spending least 5% of project construction cost, before the end of the year. Though installation completions in 2013 have been a little slow, I expect that there have been a lot of construction crews busily digging foundations in the past month. That flurry of activity will continue up until the end of the year.

Secondly, the 2013 PTC extension gives developers the option of taking an immediate 30% project cost tax credit in lieu of the PTC. That is because the legislation specifically allows projects to qualify under section 1603 of the American Recovery and Reinvestment Act. The option of taking an Investment Tax Credit (ITC) in lieu of Production Tax Credit (PTC) has been wildly popular. That’s no surprise. Investors understand the time value of money and favor the certainty of receiving a federal payment of 30% of the project cost almost immediately over the vagaries and accounting effort required to collect generation-related subsidies over a ten year period.

We have a federal government that is spending many billions to pay enormous companies to build large numbers of wind turbines while investing tens of millions to engineer and license a couple of small nuclear energy evolutionary designs that will not start producing power until the next decade. That says something very important about priorities and about the well-heeled interest groups that are dominating decisions about the expenditure of our tax money.

It’s time to make some noise. Will you join me?


I apologize for the recent quiet period. I have been working hard on that longer form material I promised.

Disclosure: I was employed by B&W mPower, Inc. until the end of September 2013 when I decided to become a full time blogger, writer and pronuclear advocate. We parted on excellent terms.

The post NuScale wins second round of DOE SMR funding under FOA appeared first on Atomic Insights.

Photo Credit: Nuclear Funding/via NuScale Website